How to track depreciation?

Dale Alspach alspach at math.okstate.edu
Fri Sep 30 10:47:16 EDT 2005


>If you're not a business then technically you can't depreciate the
>car.  When you sell the car, you create a split transaction.  In
>the asset you reduce by the full (original) value of the car, then
>the sale value goes into Income:Auto Sale, and then rest goes into
>Equity:Capital Depreciation.  I don't think you can count is as a
>capital loss.
> 
>Maybe an accountant will chime in?
> 
>-derek

I think you mean that he cannot use depreciation as a deduction on his
taxes (in the U.S.A.). Sale of an asset only generates income if there is a
capital gain. If the car were an investment, e.g., a vintage Corvette, a
loss would probably be deductible. There are some fine points here so
consulting an accountant/tax advisor (I am neither) would be advisable.

Really the asset should be depreciated each year and the depreciation
treated as an expense. For personal accounting this is rarely done.
If you expense the entire depreciation in the year of the sale, that will give a
misleading item in your reports. Dumping the depreciation into equity as
Derek suggested is one possibility. Another possibility is to expense it on
the last day of the year and keep that day out of your reports.
The sale of the car is an asset conversion of the salvage value.

Dale Alspach
not income.


More information about the gnucash-user mailing list